What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) jumped 15.1% in the morning session after stocks rallied as Republican party candidate Donald Trump was declared the winner of the 2024 US presidential election.
The market is trying to assess the impact of some of the anticipated changes under the new administration, mostly relating to trade decisions which affect semiconductor and defense stocks, regulatory measures in the crypto and energy industries, and the broader impact on key economic indicators tracked by the Fed, mostly notably inflation.
For Tesla, President-elect Trump is considered an Elon Musk ally. The stock's price action suggests investors are tempering their worries about potential new regulatory measures set to be introduced in the electric vehicle market, including the elimination of purchase tax credits.
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What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 94 moves greater than 2.5% over the last year. But moves this big are rare even for Tesla and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 19.1% on the news that the company reported third quarter results that beat analysts' gross margin expectations (19.8% vs 16.9%). That helped it beat on adjusted earnings per share, Adjusted EBITDA, and Free Cash Flow.
Additionally, Tesla saw vehicle delivery growth of 6.4% quarter on quarter, the first time the company recorded quarter on quarter delivery growth in 2024.
Moving on, guidance was encouraging as Tesla is expected to sell more vehicles in 2024 compared to the previous year. This suggests deliveries are likely to come in significantly ahead of Wall Street's estimates in the fourth quarter of 2024.
In addition, management guided for 20-30% growth in vehicles in 2025. Investors also reacted positively to the news of Tesla's cheaper electric vehicle, which is on track to begin production next year. Revenue did miss coming in at 25.18 billion vs the expectation of 25.4 billion. However, this was heavily outweighed by the positive results.
Tesla is up 15.4% since the beginning of the year, and at $286.60 per share, has set a new 52-week high. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $13,163.
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